Question

Does increased World Trade mean increased risk? Please explain

Answer 1

Yes, world trade mean increased risk.

First of all I want to introduce World Trade, it means the trade is between two different countries. It is also know as global trade, where the goods and services are transferred between international boundaries.

World trade has involves some risk which is listed below:

1. Economic risk: It is the risk which involves exchange rates, or political stability.
2. Commercial risk: This risk is occurs due to lack of knowledge about the international market. Suppose you sold a product in global market but you don't know the supplier and he is not able to pay your amount in the due date.
3. Political risk: This risk is occurs due to change in the government in the country. It occurred when the wars between two countries is started.
4. Transportation risk: Most of the goods are supplied through the sea so there are lot of risk which may involve storm, fire, leakage, theft, explosion etc.